Electric Mobility: Waiting for Clear Subsidy Guidelines

The abrupt stop of the previous purchase subsidy had significantly caused a drop in electric car sales last year. Demand only noticeably picked up again in the first months of 2025: According to the Association of International Motor Vehicle Manufacturers (VDIK), new registrations of pure electric vehicles in the first quarter rose by almost 40 percent compared to the same period the previous year. However, the reference period was unusually weak after the end of the subsidy. Overall, around 1.65 million pure electric cars are currently registered in Germany – with a total stock of about 49.4 million cars.

Whether there will be a new purchase subsidy is uncertain. SPD Member of Parliament Sebastian Roloff stated that both the Union and the SPD wanted to support the automotive industry with a set of measures. Possible options include both direct purchase subsidies and the ability to claim parts of the purchase price for tax purposes. Details are to be worked out as part of a comprehensive package to promote electromobility.

VDA and ADAC call for support of e-mobility – but no purchase incentives 

The industry is pushing for clarity. Hildegard Müller, President of the German Association of the Automotive Industry (VDA), warned that a prolonged debate about support measures unsettles consumers and hampers market development. She therefore called for quick decisions on tax incentives and support in expanding charging infrastructure. While purchase premiums could give short-term impulses, they are often not sustainable. The risk of so-called "flash in the pan" effects is high. 

Other interest groups expressed similar views. The ADAC considers support through lower charging electricity prices to be more sensible than direct purchase premiums. The German Transport Club (VCD) even fundamentally rejects direct subsidies: they are expensive, inefficient, and socially unjust. Instead, the association proposes to supplement vehicle tax with a CO₂-based bonus-malus system upon new registration. This would benefit electric cars, while vehicles with high CO₂ emissions would become more expensive.

Expansion of Tax Benefits for Company Cars 

The coalition agreement includes further plans to promote electromobility: Tax benefits for electric company cars are to be expanded, special depreciation options improved, and the vehicle tax exemption extended until 2035. 

In addition, the expansion of the charging network is to be significantly accelerated. Special attention is given to households with low and medium incomes. Here, a so-called social leasing program is planned, modeled on the French system. In France, from 2024, low-income households could use electric cars for monthly leasing rates starting at around 100 euros. The success was significant: around 50,000 households took advantage of the offer—more than expected. The German program is scheduled to start in 2027 at the earliest and will be financed from the European Social Climate Fund.